On January 13, 2021, the New York Assembly introduced Assembly Bill A1937, which nullifies policy provisions denying claims for loss or damage to property based on virus, bacterium or other microorganisms. The bill covers businesses with fewer than 250 employees working at least 25 hours a week and provides that insurers, including excess lines insurers, which indemnify insureds who file claims based on losses due to virus, bacterium or other microorganisms, may apply to the Department of Financial Services for financial relief and reimbursement. The bill further authorizes the Department of Financial Services to collect from insurers, including excess lines insurers, amounts necessary to cover such requests for financial relief and reimbursement.
Some in the industry believe the effects of the Covid-19 pandemic should not fall so heavily on insurers. Requiring insurers to cover Covid-19 related claims—with such claims likely not having been contemplated at the time of policy issuance—could place a substantial financial burden on insurers. However, the bill’s sponsor, Assemblyman Robert Carroll, claims that there is precedent for this sort of retroactive override of policy language. After hurricanes and other natural disasters, according to Carroll, southern and Gulf states have forced insurers to provide policyholders with more time to file claims, and have prevented insurers from dropping insureds.
In addition to Bill A1937, the New York Assembly has introduced Assembly Bills A871 and A41, both of which relate to the Covid-19 pandemic.
Assembly Bill A871 would require insurers to provide premium refunds, reductions or credits to insureds whose insurable risks have diminished since March 7, 2020, the beginning of the Covid-19 pandemic. The bill would apply to the following lines of insurance:
- Private passenger automobile insurance;
- Commercial automobile insurance;
- Workers’ compensation insurance;
- Commercial multiple-peril insurance;
- Commercial liability insurance;
- Medical malpractice insurance; and
- Any other line of coverage for which the measures of risk have become overstated as a result of the Covid-19 pandemic.
Assembly Bill A41 commissions the Superintendent to “review and report on the adequacy, reasonableness and affordability of business interruption insurance coverage as it relates to losses resulting from pandemics, viruses and other infectious diseases.”
We will continue to monitor the progress of these bills and will provide updates as applicable. The text of each bill can be found at the links below: